BMW 2003 Annual Report Download - page 34

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mobiles segment increased by 0.4% despite the
lower exchange rate of the US dollar. Expenditure for
the product and market offensive meant that the
segment’s profit from ordinary activities was 4.2%
lower than in the previous year.
Revenues of the Motorcycles segment fell by
6.6% as a result of the exchange rate impact. The
segment result fell by 16.7%, which was attributable,
amongst other factors, to up-front expenditure for
new models which will come onto the market from
the beginning of the financial year 2004.
The BMW Group expanded the activities of its
Financial Services segment and continued its growth
course in 2003. Revenues fell by 9.1% mainly as
aresult of exchange rate changes. The segment
result
advanced by 7.1%, another very satisfying per-
formance. This improvement was largely attributable
to higher business volumes and continuously falling
financing costs.
As in the previous year, reconciliations to the
Group profit from ordinary activities were negative
overall, whereby the amount was 14.7% lower
than in the previous year. This was due to the over-
all improved results of the Group’s financing com-
panies and financial holding companies, which
more than offset the higher eliminations of inter-
segment profit on leased assets relating to financial
services.
Financial position
The cash flow statements of the BMW Group and
its sub-groups show the sources and applications
of cash flows for the financial years 2003 and 2002,
classified into cash flows from operating, investing
and financing activities.
Based on the net profit for the year, the cash
flows from operating activities are derived using the
indirect method. Cash flows from investing and fi-
nancing activities are based on actual cash pay-
ments and receipts. Cash and cash equivalents in
the cash flow statement correspond to those dis-
closed in the balance sheet.
Operating activities of the BMW Group during
the financial year 2003 generated a positive cash
flow of euro 7,871 million (2002: euro 7,250 million).
In computing this figure, cash outflows relating to
the Rover disengagement amounting to euro 49 mil-
lion (2002: euro174 million) were allocated to in-
vesting activities.
The cash outflow from investing activities
amounted to euro 11,231 million, an increase of
euro 1,516 million compared to the previous year.
This higher cash outflow resulted mainly from the
sharp increase in the net investment in financial
services business. On a net basis, this was euro
910 million higher than in the previous year. Capital
expenditure on intangible assets and property, plant
and equipment resulted in an additional cash out-
flow of euro 164 million. Cash outflow for invest-
ments in marketable securities, which are held as
a liquidity reserve, amounted to euro 700 million, an
increase of euro 366 million compared to the pre-
vious year. 70.1% (2002: 74.6%) of the cash out-
flow from investing activities was covered by the cash
inflow from operating activities.
The cash flow statement for industrial operations
shows, as in the previous year, that the cash inflow
from operating activities exceeded the cash outflow
from investing activities by 2.6% (2002: 7.2%).
The cash flow from financing activities of the
BMW Group gave rise to a cash inflow of euro
2,768 million which was earmarked to refinance
sales financing activities.
After adjustment for the effects of exchange
rate fluctuations and changes in the composition
of the BMW Group, totalling a negative amount
of euro 82 million (2002: negative amount of euro
99 million), the various cash flows resulted in a de-
crease in cash and cash equivalents of euro 674 mil-
lion (2002: decrease of euro 104 million).